The global financial crisis has made itself felt from real estate markets in the US to Europe.
The office market in New York and London were expected to see a short-term decline in rents, according to Richard Ellis’ third quarter investment research report. Over the longer term, rental performance over the next five years would be driven in large part by supply, it said.
Although office markets in both cities were affected by substantial job losses in the financial services market over the past few months, the global real estate investment firm said it saw no reason to believe office occupier demand to be “significantly worse” in either market.
However the UK would be the hardest hit, it said, with a surplus of new development slated for London for the remainder of this year and in 2009. The report did not expect the New York office market to be as adversely affected. “While City of London rents are already falling, and are expected to continue to fall sharply over the next two years, we do not expect New York’s rents to fall as precipitously,” the report said.
Separately, the third quarter report also included analysis of the US’ neighbour to the north, Canada. The country’s property market had been benefiting from a strong economy, it said, with the country’s job market outperforming that of the US over the past ten years. In particular, the country’s industrial sector has been booming, with markets such as Toronto, Vancouver and Alberta expected to benefit the most.